Tier One and Tier Two Decisions

Every year, Jeff Bezos, Founder of Amazon, addresses his shareholders. These letters often touch on the business, innovation, and corporate culture, but one such letter shared his ethos on decision-making.

Bezos stated that Amazon is among the best companies to make mistakes. This tolerance has led to some great successes, such as the Kindle, and Amazon Web Services, and some significant failures, such as Fire Phone, Amazon Local Register, and Destinations. But most importantly, this tolerance for failure has created a feeling of safety when his team is trying new things.

If your project doesn't have a chance to fail, it's not really a risk.

The genius of Amazon and Bezos is their ability to distinguish between their decisions. They classify their decisions into Tier One and Tier Two decisions.

Tier One decisions are one-way doors, they are not reversible, and you must be very careful when making them.

Tier Two decisions are like a revolving door. If you want through and don't like where you are, you can always turn around and go back.

The problem I see many companies having is that they view their Tier Two decisions as Tier One decisions. They require layers of signatures, decision-makers, bureaucracy, and permission-granting. These layers decrease innovation, and they bring momentum to a screeching halt.

When your teams are experimenting, creative, and excited, and then you put up roadblocks and build one-way doors, no one wants to risk failure, so they'd instead not try something new.

Be careful and thoughtful when making Tier One decisions, but be quick, gracious, and excited to make Tier Two decisions.

The best leaders know how to distinguish between the tiers and encourage their teams to see the difference.